Half Year Report
2014/15
At the heart of power electronics

Business Report
Dear Shareholders,
We have kept delivering sales growth and high operating margins above our target range. We have continued to renew our
product portfolio, increased production capacity and maintained our high service level. We keep ramping up our new site in
Bulgaria, increasing our workforce from 27 to 97 employees within one year. Given the achievements of the Company in the firstsix months of 2014/15, we are confident that LEM is prepared to face the future challenges.
The known market trends continued during the reporting period: due to their lack of visibility customers keep low levels of stock,issue orders with ever shorter lead times and thereby require high flexibility from us. LEM's market in China continued to growand the Japanese market improved with export-oriented Japanese companies benefitting from the weakening yen. Due to thestrong growth across most businesses, China is now our biggest market and Asia has surpassed Europe as the biggest regionin terms of sales. However, uncertainty remained widespread in most other major economies.
Our sales in the first half of 2014/15 increased by 3.6% to CHF 131.5 million. At constant exchange rates, sales increased by
7.2%. Bookings for the first six months of 2014/15 amounted to CHF 126.6 million, up 1.9% on the same period in 2013/14. The
book-to-bill ratio in Q2 2014/15 stood at 0.93.
The gross margin decreased slightly from 46.5% in the first half of 2013/14 to 46.3% in the first six months of 2014/15. The EBIT
for the first half of 2014/15 reached CHF 29.6 million, a decrease of 2.1% compared with the same period of 2013/14. The EBIT
margin for the six months of 2014/15 was 22.5%, a decrease compared with the strong 23.8% in the first half of 2013/14.
Our tax rate increased to 22.6% from 16.7% one year ago. The increase is the result of the intended termination of the HNTE
status in China. Net profit for the first six months of 2014/15 came in at CHF 21.5 million, a decrease of 12.4% compared withthe same period in the financial year 2013/14.
Our balance sheet was just as strong as of 31 March 2014. As of 30 September 2014, total assets reached CHF 140.2 million.
Shareholders' equity reached CHF 73.8 million (CHF 94.2 million as of 31 March 2014), representing an equity ratio of 52.7%(65.1% as of 31 March 2014). The lower shareholders' equity is attributable to our dividend payment in July 2014.
Industry segment: Asia surpassed Europe to become the most important region
Sales in the Industry segment reached CHF 113.6 million in the first half of 2014/15, representing an increase of 3.4% comparedwith the same period in 2013/14. At constant exchange rates, sales increased by 6.8%. Our sales growth was driven by con­tinued strong growth in China across most businesses, export-led growth in Japan, new projects in the traction market andmarket share gains across most businesses. We recorded strong demand from the solar industry for some of the recently
launched product families, for which we significantly increased production capacity. The EBIT decreased from CHF 27.7 million
for the first half of 2013/14 by 2.5% to CHF 27.0 million for the first half of 2014/15. We recorded our strongest sales growth inChina (+17%). Sales in Europe increased by 2% on the back of a robust performance mainly in Eastern Europe while North
America declined by 17%, triggered by the continued relocation of some of our target industries to Asia. For the first time, Asia
is the biggest region for LEM, accounting for 45% of Industry sales. Europe ranks second with 43% of sales followed by North
America with 10% of sales.
–– Sales in the drives & welding business increased by 1% compared with the first half of 2013/14. We observed a sustainedtransfer of production to Asia. Consequently, sales were driven by growing Asian markets, particularly China, and weakening
markets in Europe and North America. In Japan, due to the weakening Japanese yen, we experienced tailwinds from theexport-led growth of the local industry.
–– Sales in renewables & power supplies weakened by 3%. Investments in renewable energies in China, India and Japan remainedon a high level. Business activity in Europe was stable with support from offshore wind projects, but activity in North America
was weak.
–– The traction business recorded strong performance with sales growth of 35%. We were particularly successful with our energymetering application, winning major new contracts in Europe. In addition, we recorded increased sales for high-speed train
applications in China, where about 5'000 km of high-speed lines are to be completed in 2014. Activity in light rail applications
remained high.
–– Our high-precision business recorded weak business activity due to lower investments in medical and test & measurement
applications. Sales declined by 26%, yet we increased our market share.
Automotive segment: growth in the green cars business
Sales in the Automotive segment reached CHF 17.9 million in the first half of 2014/15, up 5.0% compared with the same period
in 2013/14. At constant exchange rates, sales increased by 9.7%. Sales growth in the Automotive segment accelerated in thesecond quarter of 2014/15, with sales growing by 9.7% compared with the first quarter. This performance can be attributed toincreased sales in the green cars business in China and Japan. The EBIT remained stable with CHF 2.6 million in the first six
months of 2014/15 compared with CHF 2.5 million in the first half of 2013/14.

LEM | Half Year Report 2014/15

2

–– In the conventional cars business, our sales grew by 2% compared with the first half of 2013/14. We achieved this result thanks
to the consistent demand for our battery management solution, mainly in the US, China and Japan.
–– The recovery in the green cars business continued during the reporting period, driven by new hybrid car platforms in China
and Japan that went into production. In the first half of 2014/15, sales were 20% up on the first half of 2013/14, but still below
expectations. We continue to win new projects with Chinese car manufacturers.
Executing our strategy–– Increase technology leadership
Again in the first half of 2014/15 we made significant progress in our product development strategy. The new products offer
increased performance, new functionalities, easier integration in our customers' systems and reduced cost.
We have launched new open-loop products targeted for drives, UPS and solar applications. HO 150 NP, HO 250-P and HO
250-S are equipped with our latest proprietary ASICS and deliver best-in-class performance. The new LEM open-loop products
now offer over-current detection as a standard, a feature that meets emerging customer requirement. The new HO generation
offers a modular concept that allows programming parameters according to customers' specifications. For Automotive applications, we have launched HAH3 DR S02, a new 3-phase transducer offering better performance at lower cost for drive
applications in hybrid cars.
In Sofia, we have started to build a development & engineering team to support local operations and also to design new
products in the future.
In the first half of 2014/15 we maintained a high level of investment in R&D of CHF 7.4 million, representing 5.6% of sales.
–– Increase our efficiency
We have continued to expand our activities at our new site in Sofia, Bulgaria. Comparing the fourth quarter of operations in Sofia(Q2 2014/15) with the first quarter of operations (Q3 2013/14), we have increased the number of production lines from 1 to 3
and more than doubled headcount from 46 to 97. We currently assemble 30 products with the same service level, quality andsafety standards we guarantee for products from all our other sites. In Q2 2014/15, the production of the Sofia site accounted
for nearly 4% of LEM's global output. In the next months we will be making additional transfers of production lines to the newsite. The site in Sofia will thereby continue to grow and help us to diversify our cost-effective production while being close to our
European markets. We are in the process of upgrading our ERP (enterprise resource planning) system, aiming to increase thespeed and efficiency of our internal processes.
–– Increase our production flexibility
In the first half of 2014/15 we have recorded increased demand for solar products. Consequently, we have increased production
capacity for several product families, with some production lines dedicated to solar. We managed this process smoothly andwithout compromising on delivery performance. Our customers' preference for short-term orders remained a key challenge.
Still, we maintained our high service level. Our goal is to maintain high service levels by synchronizing the supply chain with our
suppliers.
OutlookIn the second half of 2014/15 we expect business activity in the Industry segment to slow due to the seasonality in the solar
business during the winter months, a weaker Q3 due to fewer working days and slowing activity in Europe. We expect sales
growth in the Automotive segment to continue thanks to the start of production of new platforms. The financial year 2014/15
will witness a high number of product launches. Product prices across all businesses will remain under pressure.
For the full financial year 2014/15 we expect sales of CHF 250 to 260 million compared with CHF 245.6 million in the financial
year 2013/14. We expect the full-year EBIT margin to remain above 20%.
We thank you for your continued trust in LEM.
Yours sincerely,

Andreas Hürlimann
Chairman of the Board of Directors

François Gabella
Chief Executive Officer

LEM | Half Year Report 2014/15

3

Key Figures, Financial Calendar,
Contacts
Key figures

First half vs. first half

Second quarter vs. first quarter2014/15
In CHF millions

2013/14
In CHF millions

Orders received

126.6

124.3

Book-to-bill ratio

0.93

0.91

Sales

131.5

126.9

+ 3.6

Gross profit
In % of sales

Q2 2014/15
In CHF millions

Q1 2014/15
In CHF millions

Change
In %

+ 1.9

61.9

64.7

– 4.4

+ 2.2

0.93

1.00

– 7.0

66.5

65.0

+ 2.2

60.9

59.0

+ 3.3

31.5

29.4

+ 6.9

46.3%

46.5%

– 0.1pt

47.4%

45.3%

+ 2.1pt

EBIT
In % of sales

Change
In %

29.6

30.2

– 2.1

16.0

13.5

+ 18.4

22.5%

23.8%

– 1.3pt

24.1%

20.8%

+ 3.3pt

10.8

10.7

+ 0.4

Net profit for the period

21.5

24.5

– 12.4

EPS basic

18.87

21.56

– 12.4

Operating cash flow

25.2

15.5

+ 62.1

12.8

12.4

+ 3.5

Investing cash flow

– 3.6

– 4.6

+ 21.5

– 1.9

– 1.8

– 5.8

30.9.1431.3.14

ChangeIn %– 94.7

Net financial assets/ (­liabilities)

1.3

24.6

Shareholders' equity

73.8

94.2

– 21.6Equity ratio (in % of total assets)

52.7

65.1

– 12.4pt

Market capitalization

813

801

+ 1.4

Employees (FTEs)

1'278

1'241

+ 2.9

Sales per segment

Regional sales breakdown

In CHF millions

In CHF millions

70

61.8

65.1
57.6

60

65.0

61.1

66.5

60
50

50
40

87%

84%

86%

87%

86%
30

42%

65.1
57.6
44%
43%

20%

18%

39%

39%

18%

61.1

39%

18%

65.0

47%

15%

66.5

45%

16%

20

20

0

61.8

40
87%

30

10

70

10
13%

13%

16%

14%

13%

14%

39%

42%

37%

39%

0

Q1 2013/14 Q2 2013/14 Q3 2013/14 Q4 2013/14 Q1 2014/15 Q2 2014/15

Q1 2013/14 Q2 2013/14 Q3 2013/14 Q4 2013/14 Q1 2014/15 Q2 2014/15

Industry segment
Automotive segment

Asia and Rest of the World
North America
EuropeFinancial calendar
The financial year runs from 1 April to 31 March

17 February 2015

Third quarter results 2014/15

4 June 2015

Year-end results 2014/15

25 June 2015

Ordinary Shareholders' Meetingfor the year 2014/15

30 June 2015

Dividend ex-date

2 July 2015

Dividend payment date

LEM | Half Year Report 2014/15

4Media andinvestor contact
Julius Renk (CFO)
Phone: +41 22 706 1250
E-mail: investor@lem.com

Address
LEM Holding SA
Avenue Beauregard 1
CH-1700 Fribourg
Phone +41 26 460 10 30
Fax +41 26 460 10 39
www.lem.com

Interim
Consolidated
Financial
Statements

Consolidated Statement of
Financial Position
AssetsIn CHF thousands

Notes

30.9.201431.3.2014

Current assets
Cash and cash equivalents

13'300

24'581

Accounts receivable

52'30848'290Inventories

32'20728'495

Income tax receivable

729

802

3'251

4'704

101'795

106'872

3'516

4'103

Property, plant and equipment

25'70525'180Intangible assets

6'516

5'755

2'656

2'765

Total noncurrent assets

38'39437'803

Total assets

140'189

144'675

30.9.201431.3.2014

19'51419'483

Other current assets

4

Total current assets
Noncurrent assets
Deferred tax assets

11

Other noncurrent assets

4

Liabilities and equity
In CHF thousands

Current liabilities
Accounts payable
Accrued expenses

16'131

16'133

Income tax payable

11

8'121

6'579

Current provisions

5

1'436

1'070

Current financial liabilities

6

12'000

Other current liabilities

7

Total current liabilities

2'263

319

59'46643'584

Noncurrent liabilities
Noncurrent provisions

5

2'174

2'886

Deferred tax liabilities

11

4'225

3'607

Other noncurrent liabilities

511

394

Total noncurrent liabilities

6'910

6'887

Total liabilities

66'37650'471570

570

EquityShare capital

8

Treasury shares

8

(856)

(745)

Reserves

8

13'100

9'298

Retained earnings

61'00085'081

Total equity

73'81494'203

Total liabilities and equity

140'189

144'675

LEM | Half Year Report 2014/15

6

Consolidated Income Statement
April to September
In CHF thousands

2014/15

2013/14Sales

131'497

126'897

Cost of goods sold(70'579)(67'927)

Gross margin

60'91858'969

Sales expense(11'783)(11'565)

Administration expense(12'454)(9'909)Research & development expense(7'414)(7'338)(1)(57)

Other expense
Other income

332

125

29'59830'224

Financial expense

(73)

(81)

Financial income

131

46

(1'879)(710)

27'77729'480Operating profit

Exchange effect910Profit before taxes
Income taxes
Net profit for the period11(6'287)(4'937)

21'491

24'542

18.87

21.56

Earnings per share, in CHF

Basic and diluted earnings per share

LEM | Half Year Report 2014/15

7

Consolidated Statement ofComprehensive Income
April to September
In CHF thousands

2014/15

2013/14

Net profit for the period recognized in the income statement

21'491

24'542Currency translation difference

3'691(1'680)Total other comprehensive income to be reclassified
to profit and loss in subsequent periods

3'691(1'680)Remeasurement gains/(losses) on defined benefit plans

63

(686)

Income tax

(14)

159

Total other comprehensive income not to be reclassified
to profit and loss in subsequent periods

49

(527)

Other comprehensive income/(loss) for the period, net of tax

3'740(2'207)

Total comprehensive income for the period

25'23122'336

Attributable to shareholders

25'23122'336

Other comprehensive income to be reclassified to
profit and loss in subsequent periods

Other comprehensive income not to be reclassified
to profit and loss in subsequent periods

Consolidated Statement of
Changes in Equity
Attributable to shareholders
In CHF thousands

Notes

1 April 2013*

Share ­capital

Treasury shares

Capital reserve

Translation
reserve

Retained­earnings

Total equity

570

(765)

12'708(457)

71'99384'04924'542

24'542(527)(2'206)

Net profit for the period
Other comprehensive
income/(loss)(1'680)Total comprehensive income(1'680)

Dividends paid

8

Movement in treasury shares

8

24'01522'336(34'157)(34'157)

(139)

139

(120)

(120)

30 September 2013

570

(904)

12'847(2'137)61'73272'1081 April 2014

570

(745)

12'688(3'390)85'081

94'20321'491

21'49149

3'740

Net profit for the period
Other comprehensive
income/(loss)

3'691

Total comprehensive income

3'691

Dividends paid

8

Movement in treasury shares

830 September 2014

570

* Restatement following IAS 19R application (pensions).

LEM | Half Year Report 2014/15

8

(111)

111

(856)

12'799301

21'540

25'231(45'568)(45'568)

(52)

(52)

61'00073'814

Consolidated Cash Flow Statement
April to September
In CHF thousands

Notes

2014/15

2013/14

Profit before taxes

27'77729'480Adjustment for noncash items and taxes paid

4'025

(5'387)

Cash flow before changes in net working capital

31'80224'093

Cash flow from operating activities

Cash flow from changes in net working capital(6'614)(8'553)

Cash flow from operating activities

25'188

15'540Investment in fixed assets(2'364)(4'101)

Investment in intangible assets(1'219)(520)

Cash flow from investing activities

Increase (–) / decrease (+) in other assets
Cash flow from investing activities

(25)

24

(3'607)(4'597)

Cash flow from financing activities
Treasury shares acquired (–) / divested (+)

8

(52)

(120)

Dividends paid to the shareholders of LEM Holding SA

8(45'568)(34'157)

Increase (+) / decrease (–) in financial liabilities

6

12'000

9'000

Cash flow from financing activities(33'620)(25'277)

Change in cash and cash equivalents(12'039)(14'334)

Cash and cash equivalents at the beginning of the period

24'58127'629758(491)

13'30012'804

Exchange effect on cash and cash equivalents
Cash and cash equivalents at the end of the period

LEM | Half Year Report 2014/15

9Notes to the Interim Consolidated
Financial Statements
1 General information
LEM Group is a market leader in providing innovative and high quality solutions for measuring electrical parameters. Its coreproducts – current and voltage transducers – are used in a broad range of applications in drives & welding, renewable energies & power supplies, traction, high precision, conventional and green cars businesses.
2 Significant accounting principles
These unaudited consolidated financial statements for the six months ended on 30 September 2014 have been prepared inaccordance with International Accounting Standard (IAS) 34 “Interim Financial Reporting”. They do not include all the information and disclosures presented in the annual consolidated financial statements and should therefore be read in conjunction withthose for the year ended 31 March 2014.
The accounting and valuation policies are consistent with those applied in preparing the annual consolidated financial statements for the year 2013/14, except where noted below.
Since the beginning of the financial year, LEM has transformed the LEM Incentive System part 2 into a long-term incentive planwith the following characteristics:–– three-year vesting period;–– cash payment after the third year, conditioned by presence in the last year;–– based on long-term financial performance of the Group.
The new plan requires an accrual over the vesting period of three years, as opposed to the previous plan, which was fully charged
only in the final year. The new plan will lead to a first payout as per June 2017 (for managers present in 2016/17). In principle, thisgenerates a surcharge over the next two years. As of 30 September 2014, the amount is not significant.
The preparation of the interim consolidated financial statements in conformity with IFRS requires management to make estimatesand assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and related disclosures at thedate of the interim financial statements. These estimates are based on management's best knowledge of current events andactions that the Group may undertake in the future. However, actual results could differ from those estimates.
In accordance with IAS 1 'Presentation of Financial Statements', the financial information is presented in thousands of CHF. The
totals are calculated with the original unit amounts, which could lead to rounding differences. These differences in thousands ofunits are not changed in order to keep the accuracy of the original data.
In 2014/15, LEM Group introduced the following revised standards and interpretations:Standard or­i nterpretation

Title

ImpactEffective date

IAS 32

Offsetting Financial Assets and Financial Liabilities –Amendments

None

1 January 2014

IAS 39Novation of Derivatives and Continuation of Hedge
Accounting – Amendments to IAS 39

None

1 January 2014

Amendments
to IFRS 10,
IFRS 12 andIAS 27

Investment entities

None

1 January 2014

IFRIC 21

LeviesNone

1 January 2014

The new and revised standards do not have a material effect on the consolidated financial statements of LEM Group.

LEM | Half Year Report 2014/15

10

The following table summarizes the principal exchange rates that have been used in the translation process.
Period-end rate for balance sheet
30.9.1431.3.14

BGN

0.617

0.623

CNY

0.155

0.143

Period average rate for income statement

Var. in %2014/15

2013/14

Var. in %– 1.0%

0.622

0.630

– 1.3%+ 8.4%

0.146

0.152

– 3.9%

DKK

0.162

0.163

– 0.6%

0.163

0.165

– 1.2%

EUR

1.206

1.219

– 1.1%

1.216

1.233

– 1.4%

GBP

1.548

1.474

+ 5.0%

1.511

1.446

+ 4.5%

JPY

0.00870.0086+ 1.2%

0.00880.0095– 7.4%

RUB

0.024

0.025

– 4.0%

0.025

0.029

– 13.8%

USD

0.954

0.885

+ 7.8%

0.901

0.938

– 3.9%

3 Segment information
April to September 2013
In CHF thousands

April to September 2014
Industry

Automotive

LEM Group

In CHF thousands

Sales

109'804

17'092

126'897

Operating profit

27'7232'501

30'224

Industry

Automotive

LEM Group

Sales

113'552

17'945131'497

Operating profit

27'016

2'581

29'598

4 Other current and noncurrent assets
The decrease of the other current assets is mainly linked to the decrease in the fair value of the derivatives in relation with foreignexchange hedging.
5 Current and noncurrent provisions
Warranty and customer claims
Provisions for warranty and customer claims cover expected warranty claims which are not covered by insurances. The provisions have been estimated based on past experience and the risk assessment of management. The warranty provision is
expected to be used over the next five years.
Litigations and consumption taxes
Despite the care that LEM applies in the separation process with personnel, such separation may result in legal conflicts. The
Group will defend its case and management estimates the reasonable risk to be provided for.
The Company operates in multiple jurisdictions with complex legal and tax regulatory environments. In the frame of the continuous improvement of its processes and systems, LEM has started a review of the consumption taxes in several countries. It
has appeared that some of LEM's subsidiaries may not have been fully compliant with their local consumption tax regulations.
As a consequence, LEM has estimated consumption tax provisions according to management best judgment. Some of these
positions are inherently uncertain and include the interpretation of local regulations applied to complex transactions.
Per 30 September 2014, the decrease of provisions compared to 31 March 2014 is mainly linked to the evolution of warranty
and customer claims provisions.
6 Current financial liabilities
LEM Group increases financial short-term liabilities to CHF 12.0 million (CHF 0.0 million at 31 March 2014) via short-term credit
lines in order to finance the CHF 45.6 million dividend.
7 Other current liabilities
Other current liabilities increase is primarily due to the change in the fair value of the derivatives in relation with foreign exchange
hedging.

LEM | Half Year Report 2014/15

11

8 Equity
At the shareholders' meeting held in Fribourg on 26 June 2014, the shareholders approved the distribution of an ordinary divi­
dend of CHF 40.00 per share resulting in an estimated payout of CHF 45'557 thousand. The gross dividend effectively paid on
4 July 2014 amounted to CHF 45'568 thousand (prior year: ordinary dividend of CHF 30.00; total CHF 34'157 thousand).
In the frame of its market-making contract, LEM has acquired a net of 91 shares for a total net amount of CHF 111 thousand,generating a net charge of CHF 52 thousand in equity. At 30 September 2014, LEM owns 1'175 treasury shares.
In the prior year period, LEM had acquired a net of 191 shares for a total amount of CHF 139 thousand, generating a net
charge of CHF 120 thousand in equity. At 30 September 2013, LEM owned 1'507 treasury shares.
9 Operating profit
The gross margin increase of CHF + 1.9 million can be explained by the positive impacts of increased volumes, lower costs andprice and mix.
The increase in operating expenses contributed to the decrease in the operating profit of CHF – 0.6 million. The increasein administration expense of CHF + 2.5 million is the main driver of the operating expenses and can mainly be explained by thefurther development in LEM Bulgaria and additional strategy consulting costs.
10 Exchange effect
The foreign exchange effect is driven by the currencies' parity versus Swiss franc.
In the first half of last year, the JPY devaluated compared to CHF whereas CNY and USD remained fairly stable. In the first half
2014/15, CNY and USD were revaluating versus CHF whereas JPY remained fairly stable.
11 Income taxes
Income tax expense is calculated based on the best estimate of the applicable annual income tax rate expected for the full year.
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. In certain of these jurisdictions,
the Group has taken income tax positions that management believes are supportable and are intended to withstand challenge
by tax authorities. Some of these positions are inherently uncertain and include those relating to transfer pricing matters and theinterpretation of income tax laws applied to complex transactions. The Company periodically reassesses its tax positions.
Changes to the financial statement recognition, measurement, and disclosure of tax positions are based on management's best
judgment given any changes in the facts, circumstances, information available and applicable tax laws. Considering all available
information and the history of resolving income tax uncertainties, the Group believes that the ultimate resolution of such matterswill not have a material effect on its financial statements.
Differences between the final tax outcome and the amounts that were initially recorded impact the income and deferred taxes
in the period in which such determinations are made. The Group calculates its expected average tax rate as a weighted averageof the tax rates in the tax jurisdictions in which the Group operates.
Following its qualification as High/New Technology Enterprise (HNTE) in China, LEM China enjoyed reduced income tax rates
from 2011 to 2013. As per 30 September 2014, the confirmation for 2012 and 2013 is still under consideration by the Chinese
tax authorities. On the basis of the existing documentation, management considers that the chance of obtaining the confirmation for 2012 and 2013 is significantly higher than the risk of losing the HNTE status.
At 31 March 2014, following the strategic decision to not further increase the R&D expenses in LEM China, the Groupconsidered that LEM China will not fulfill the conditions for the HNTE status in 2014. LEM China has therefore been reportedwith the stand­ard 25% tax rate for the period starting 1 January 2014.
The increasing expected tax rate at 30 September 2014 versus 30 September 2013 is mainly linked to the increase in tax rate
in China from 15% at half-year 2013/14 to 25% at half-year 2014/15.

LEM | Half Year Report 2014/15

12

12 Consolidated cash flow statement
The adjustment for noncash items increases by CHF+9.4 million compared to 30 September 2013 mostly due to a change inthe fair value of derivatives (foreign exchange hedges) and a reduction in taxes paid.
The cash flow from changes in net working capital evolution is linked to the increase of the business volumes during the first halfyear 2014/15 which leads to an increase in receivables while payables remain stable.
Financial liabilities increase to finance the CHF 45.6 million dividend.
The exchange effect on cash and cash equivalent is driven by the currencies' parity versus Swiss franc, as explained in note 10
Exchange effect.
13 Financial assets and liabilities
The group classifies its financial assets and liabilities into the following categories as per IFRS 7:
Financial assets
In CHF thousands

Cash and cash equivalents
Accounts receivable
Derivative financial instruments –current
Other current financial assets
Derivative financial instruments –noncurrent
Other noncurrent financial assets
Total
Financial liabilities
In CHF thousands

Accounts payable
Accrued expenses
Derivative financial instruments –current
Other current financial liabilities
Bank loans
Derivative financial instruments –noncurrent
Other noncurrent financial liabilities
Total

30.9.2014
Fair value

31.3.2014
Fair value

Loans andreceivables

13'30052'30824'581
48'290

X
X

0
19

455
55

X

0
656
66'283

21605
74'007

X

30.9.2014
Fair value

31.3.2014
Fair value

Loans andreceivables

19'514
16'131

19'483
16'133

X
X

1'726
29
12'000

0
27
0

X
X

106
404
49'9100394
36'037

At fair value throughprofit and loss

XX

At fair value throughprofit and loss

X

X
X

The management assessed that fair value level of cash and cash equivalents, accounts receivables, other current and noncurrent assets, accounts payables, accrued expenses and other current and noncurrent liabilities that are not measured at fair value
approximate their carrying amounts in view of their short-term nature and are consequently not separately disclosed.
The Group enters into derivative transactions such as currency risk reversal and forward contracts to hedge the USD and EUR
risks.
The purpose of these currency hedges is to manage the currency risks arising from the Group's operations.
It is the Group's policy that no derivatives for speculative purposes shall be entered into.
The main risks arising from the Group's financial instruments are foreign currency risks and credit risks, whereas the others areof minor or no impact.
The Board of Directors reviews and agrees policies for managing each of those risks.

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Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices).
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
The Group's financial liabilities at fair value amount to CHF 1'832 thousand per 30 September 2014 (financial assets of
CHF 476 thousand per 31 March 2014), all classified under level 2.
During the first half of the financial year 2014/15, there were no transfers between Level 1 and Level 2 fair value measurements,
and no transfers into and out of Level 3 fair value measurements.
14 Changes in scope of consolidation
LEM is currently finalizing the simplification of its European agencies. The merger of LEM France and LEM Belgium into LEM
Germany will be effective before the end of the financial year, changing the scope of consolidation but without generating any
impact on consolidated financial statements.
On 8 April 2013, the company incorporated as LEM Danfysik A/S was liquidated without any impact on the consolidated equity.
15 Events after the balance sheet date
The Board of Directors and Senior Management are not aware of any significant events up to the date of approval of the interim
consolidated financial statements on 6 November 2014 that would require an adjustment in carrying amounts of the Group's
assets and liabilities.

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14

LEM Holding SA
Avenue Beauregard 1
CH-1700 Fribourg
Phone +41 26 460 10 30
Fax +41 26 460 10 39
www.lem.com
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